Fail-Safe Computer Inc

question 26

Multiple Choice

Fail-Safe Computer Inc.sells equipment with a 2-year warranty.Prior experience indicates that costs for warranty repairs average 3% in the first year,and 2% in the second year.Sales were $300,000 and $400,000 in fiscal 2016 and 2017 respectively.It paid $5,000 for materials and labour to make warranty-related repairs in 2016.What amount will be recorded as warranty expense in 2016?

• A)$5,000
• B)$12,000
• C)$15,000
• D)$18,000

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Definitions:

Income

The amount of money or its equivalent received during a period of time in exchange for labor, goods, or services, or as profit on capital.

Indifference Curves

Graphical representations in economics showing combinations of goods among which a consumer is indifferent, helping to analyze consumer choices.

Nickels

A five-cent coin made by the United States Mint.

Quarters

In financial and business terms, one of the four three-month periods into which the fiscal year is divided for reporting and forecasting purposes.